A caller to the Dave Ramsey Show recently sparked a pointed conversation about cars, wealth-building, and what it truly means to earn a solid income. The caller was a 24-year-old named Micah. He earns $80,000 per year, maxes out both his 401(k) and IRA, and carries zero debt. His question was direct: he has $30,000 in cash he wants to put toward a 2019 Nissan 370Z as a weekend car, but he is unsure whether investing the money would serve him better.
Ramsey’s response was blunt. He offered one guiding principle for anyone who wants to build real wealth rather than just look the part.
What Ramsey Says Will Stop You From Building Wealth
Ramsey told Micah flat out that buying the sports car was a poor choice for anyone serious about getting rich. He acknowledged his own love of cars, mentioning he had driven to the studio in his Raptor that morning, before landing on his core point: “If you’re going to build wealth, you have to keep as small an amount as possible going into things that go down in value.” In Ramsey’s framework, cars are the textbook example of a wealth-eroding purchase.
The depreciation math backs him up. According to Kelley Blue Book, most vehicles lose roughly 20% of their value in the first year alone, and on average about 55% within five years. Applied to a $30,000 purchase, that math leaves the car worth roughly $13,500 half a decade later. Ramsey also uses a practical rule of thumb: the combined value of every vehicle you own should not exceed half your annual take-home pay. For someone earning $80,000, that ceiling sits at $40,000 total, which includes any car Micah already drives.
Ongoing ownership costs add further pressure. AAA’s 2025 “Your Driving Costs” study puts the average annual cost of owning and operating a new vehicle at $11,577, covering fuel, maintenance, insurance, depreciation, and financing. That figure actually fell $719 from 2024 thanks to lower depreciation, reduced finance charges, and falling gas prices, yet it remains a substantial drag on any household budget. Depreciation alone now accounts for an average of $4,334 per year, making it the single largest ownership expense. Financed buyers carry an even heavier burden: the average new-car monthly payment reached $767, according to Experian data, while Edmunds pegged it slightly higher at $772, with roughly one in five new-car buyers committing to payments of $1,000 or more per month. For anyone trying to build long-term wealth, attaching a large monthly payment to a depreciating asset is one of the fastest ways to undercut that goal.
Ramsey’s standing advice is to avoid car loans entirely and to buy reliable used vehicles with cash whenever possible. His logic is straightforward: paying interest on something that loses value every month is a double loss, and the longer the loan term, the deeper that hole becomes.
Is It Ever OK to Splurge?
Ramsey’s core argument about cars eroding wealth is well-founded. A sports car is an expense, not an asset, and any financial plan that treats it otherwise is built on shaky ground. Micah’s specific situation, though, is worth examining on its own terms, because the details here matter quite a bit.
Micah is already doing things that most people in their twenties are not. He maxes out his retirement accounts, carries no debt, and has saved $30,000 in cash to cover the purchase outright, with no plan to finance anything. That profile is a far cry from the average American carrying a $767 monthly car payment on a loan that stretches past five years.
On a pure numbers basis, investing that $30,000 for compound growth or applying it to a home down payment would likely produce more wealth over time. Even so, there is a meaningful difference between advising someone piling up debt on a car they cannot afford and counseling someone who has already built a disciplined financial foundation. The real question for Micah is whether he can sustain all his good habits after the purchase.
If he can keep funding his retirement accounts, stay out of debt, and comfortably cover the insurance and maintenance costs on a sports car, buying it in cash is a defensible call. Wealth-building is a long game, and treating every spending decision as a moral failure is a reliable path to burnout. The approach that actually keeps people on track is simpler: save first, invest consistently, and pay cash for the things you enjoy without breaking the plan that got you there.
Editor’s note: This article was updated to reflect that AAA’s 2025 “Your Driving Costs” study shows average annual vehicle ownership costs fell $719 from 2024 to $11,577, and that average annual depreciation now stands at $4,334. The five-year depreciation estimate was also revised to 55% of original value, in line with current Kelley Blue Book cost-to-own data.
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